Glasspool v Southwark London Borough Council

Compulsory purchase – Compensation – Valuation — Defendant local authority acquiring maisonette on blighted estate – Claimant leaseholder applying for compensation — Comparables being used to assess open market value – Matter being referred to tribunal for determination of compensation — Whether experts adopting correct approach to valuation of reference property – Whether claimant entitled to compensation for home loss and disturbance – Application granted in part The claimant held a leasehold interest in a ground and first floor maisonette at 49 Cuddington, Deacon Way, London SE17 which was compulsorily acquired by the defendant local authority under a general vesting declaration on 6 November 2013 which was agreed to be the valuation date. The property was part of a housing estate with four tower blocks surrounding 10 low-rise blocks of maisonettes in a landscaped and wooded central area. It had a gross internal area of 100 square metres and was located on the ground and first floors of a low-rise block. It had three double bedrooms and front and rear gardens. The compulsory purchase order had been made following a resolution to demolish and regenerate the estate. When the claimant vacated the property, he left behind a number of items, including a washing machine and refrigerator, because he did not want to pay for them to be kept in storage. The defendants disposed of them. The parties agreed that the claimant was entitled to a home loss payment of 10% of the open market value of the property. The claimant said the open market value was £300,000; the defendants argued that it was £235,000. The claimant applied for compensation for disturbance in respect of the value of specified items that were left in the property at the valuation date (£2,725); and the future costs of acquiring an alternative property (estimated at £7,470). The defendants argued that the claimant had agreed not to retain any items he had not removed by the valuation date. Furthermore, there was no evidence in support of the claimant’s figure of £2,725 and the claim for future losses was hypothetical. Held: The application was granted in part. (1) The parties’ experts had based their assessments of the open market value of the maisonette on the sale prices of 10 comparables, one of which, a three-bedroom maisonette in a nearby high-rise block, sold for £285,000, was common to both. However, they did not adjust the sale price of that property in the same way which had resulted in different valuations. Some of that difference was accounted for by the experts’ differing approaches to the indexation of values. The approach taken by the defendants’ expert was to be preferred since it relied upon the objective and agreed evidence of the completion date. In a rising market, that was the correct approach. There was no evidence of the dates when contracts were actually exchanged and the claimant’s adoption of a date two months prior to completion in each case was speculative. (2) Both experts made adjustments for floor level and type of block (high rise or low rise), outside space and condition. The claimant used percentage adjustments while the defendants used spot figures (except when considering location where he used a percentage adjustment). The tribunal preferred the use of percentage adjustments as being more consistent when applied across the range of comparables. The advantage of the reference property being in a low rise block had to be taken into account. The comparable had a view of the London skyline and access to a small, shared balcony, whereas the maisonette was on the ground floor of a low-rise block with gardens. There would be a downward adjustment of 5% from the sale price of the comparable to reflect the benefit of its view, a 2.5% upward adjustment to reflect the maisonette’s situation in a low-rise block, a 2.5% upward adjustment to reflect the fact that the gardens were worth more than the access to a shared balcony and a 10% downward adjustment to reflect the fact that the comparable was not on an estate isolated from the broader community by monolithic perimeter tower blocks. From an analysis of the comparables and placing most weight on the one common to both experts, the open market value of the maisonette at the valuation date was £286,000. (3) A claimant was under a duty to take reasonable steps to mitigate his loss and he could not recover a loss which was avoidable. The claimant knew when possession was due to be taken. The loss of some of his possessions (or at least the loss of their value) was avoidable had the claimant taken steps to dispose of those items that he knew he would be unable to take with him upon his inevitable dispossession from his property. A claimant could not mitigate his losses by doing nothing. Nor was there any evidence to support the claimant’s estimate of the value of his lost possessions; his estimates were arbitrary. The second-hand value of items such as a washing machine or a refrigerator could readily be estimated by modest research online but it was not for the tribunal to undertake that task. In those circumstances, the claim for the value of the items disposed of by the defendants would be disallowed. (4) The right to make a claim could not properly be limited by an acquiring authority specifying a date by which an alternative dwelling had to be acquired if a claim was to be admitted. But on the other hand an acquiring authority needed reasonable certainty about the timescale for paying compensation following the taking of possession and could not be expected to provide for contingent liabilities indefinitely. Furthermore, until the loss was actually incurred the claimant was not out of pocket. However, the date on which the claimant’s compensation was to be assessed was the valuation date. Losses which had not yet been incurred on that date, but which, on a balance of probability, were liable to be incurred as a result of the acquisition, ought in principle to be the subject of compensation. An acquiring authority could not specify a date by which an alternative dwelling had to be purchased, but it did need reasonable certainty about the timescale for paying compensation. It could not be expected to provide for contingent liabilities indefinitely. It had been foreseeable at the valuation date that the claimant would probably incur costs by buying and moving into another house, and his calculation of those costs at £7,470 was reasonable. It did not matter that the costs were hypothetical and had not yet been incurred. There had to be finality, even if that involved making some assumptions about the future which might prove incorrect. The fact that there was some uncertainty was not a reason for rejecting the claim. Lancaster City Council v Thomas Newall Ltd [2013] EWCA Civ 802 considered. The claimant appeared in person; The defendants appeared by their representative. Eileen O’Grady, barrister Click here to read a transcript of Glasspool v Southwark London Borough Council